South Korea has committed $150 billion to assist the United States in revamping its shipbuilding sector - and to challenge China's dominance.South Korea has committed $150 billion to support its shipbuilding companies in entering the U.S. market under a new trade agreement with Washington, an action that may aid America in revitalizing its shipbuilding industry and challenge China's leadership in this field.
On Wednesday, U.S. President Donald Trump stated that the United States and South Korea had reached a "comprehensive and final" trade agreement, under which the U.S. would apply a 15 percent tax on South Korean products and receive $350 billion in investments from its Asian partner.
Not long after, South Korean President Lee Jae-myung mentioned that US$150 billion from the promised investment would be allocated to shipbuilding — an industry where South Korean companies hold the second-largest share in the global market, following China.
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The capital would offer "strong backing" to South Korean firms looking to enter the U.S. shipbuilding sector, Lee mentioned in a Facebook update on Thursday. The broader $350 billion investment plan aimed to strengthen mutual collaboration in key industries, such as semiconductors, he noted.
On Thursday morning, Seoul explained during a press briefing that the promised financial support would not be provided as direct equity investments, but rather "mainly through loans and guarantees."
This week, local South Korean media outlets stated that Seoul suggested a multi-billion dollar initiative to Washington called "Make American Shipbuilding Great Again" during trade discussions. This plan would include significant investments in the US by Korean shipbuilders along with government financial support.
State-backed organizations such as the Korea Exim Bank and Korea Trade Insurance Corporation were under discussion for participation in the plan, according to a report by South Korea's Yonhap News Agency on Monday.
South Korea's shipbuilding sector is seen as having a special advantage in supporting Washington's goal to rejuvenate American shipbuilding and limit China's influence in the industry.
This year, Washington unveiled proposals tostart imposing high port chargesfocusing on vessels constructed or managed in China starting from October. The policyseems to already be reaping the benefitsSouth Korea's shipbuilding companies are growing anxious about placing new orders with Chinese shipyards.
In the first half of 2025, South Korea's portion of new ship orders increased to 25.1 percent in terms of gross tonnage, up from 15 percent in the previous year. Meanwhile, China's share decreased to 51.8 percent from 70 percent, as reported by the Export-Import Bank of Korea in a statement released on Monday.
The report indicated that South Korea's regain in market share was mainly due to the tensions between the US and China, although it noted that these advantages might not be sustained for long, as actions taken by the US against China could lead to higher shipping rates and logistics expenses on US routes.
Nevertheless, experts voiced doubt regarding the practicality of Seoul's funding commitment and warned that restoring America's shipbuilding capabilities would probably be a lengthy and difficult endeavor.
"It's not a foreign nation investing in the United States. It's individual businesses that are doing so, and the government cannot control their actions," stated Lars Jensen, founder of the maritime advisory firm Vespucci Maritime.
He mentioned that it's simple to declare a significant investment amount over an unspecified timeframe, but that the real challenge lies in the execution.
Wu Jialu, a senior industrial research analyst at Citic Futures, stated that the $150 billion investment could encourage South Korean shipbuilders to construct or purchase shipyards in the United States, offering skilled personnel and technical assistance.
South Korean companies may contribute to enhancing the competitiveness of the US shipbuilding sector, especially in building high-value ships, although bringing the entire industry back to strength would remain a lengthy endeavor because of constraints in supply chains and production capacity, she noted.
The complete effect of the US port charges remains uncertain, and upcoming market developments will also be influenced by the demand for fleet modernization and upgrades, Wu noted.
Hanwha Ocean, a leading shipbuilder in South Korea, announced a significant investment in December to purchase Philly Shipyard located in Philadelphia, which is now the sole U.S. shipyard managed by a South Korean firm.
In late July, Hanwha Ocean's American branch ordered a liquefied natural gas vessel from the Philly Shipyard, marking the first LNG carrier destined for export to be constructed in the United States in almost half a century.
Nevertheless, a large part of the construction will take place at Hanwha Ocean's Geoje shipyard in South Korea, while the Philly Shipyard will handle US regulatory compliance and safety certifications, according to Hanwha, which mentioned that it was "establishing the groundwork for a joint production model."
Japan also concluded an agreement with the United States in July that will establish a US$550 billion fund aimed at financing various initiatives, including thebuilding and upgrading of shipyards located in the United States.
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This piece was first published in the South China Morning Post (www.scmp.com), a top news outlet covering China and Asia.
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